Australia and Indonesia have pledged closer strategic ties in the Indian and Pacific Oceans in what is being seen as a sign of growing concern about China's militarisation in the South China Sea.

Key points:

Mr Morrison admitted he had inherited a healthy bilateral relationship with Indonesia from his predecessor Malcolm Turnbull

A strategic partnership between the countries was formalised at the Presidential Palace

The two leaders announced the conclusion of a free trade deal

The joint declaration, released after the meeting between Prime Minister Scott Morrison and Indonesian President Joko Widodo, makes no specific reference to China, but makes several mentions about concerns relating to the, "rules-based regional architecture".

China has repeatedly ignored international law as it continues to claim disputed territories in the South China Sea as its own.

The elevation of Indo-Australian security ties to a Comprehensive Strategic Partnership was formalised by Mr Widodo and Mr Morrison at a signing ceremony at the Presidential Palace in Bogor.

The Joint Declaration talks of "the threats of conflict" and "shifts and challenges" in the "dynamic region" both countries share.

"If left unattended, these may lead to the dismantling of the precious ecosystem and rules-based regional architecture that we have built over the past half-century."

"Our partnership reflects our vision of a region in which the Association of Southeast Asian Nations (ASEAN) is central, the rights of all states are respected, and countries behave in accordance with international rules and norms."

When asked whether the agreement was about standing up to China, Mr Morrison rejected the notion of a "zero-sum game".

"For one relationship to be stronger, another relationship doesn't have to be weaker" he said.

"I don't accept the zero-sum game of dealing with our partners and our neighbours … we are great friends of the United States, of the United Kingdom. We have worked closely and shared prosperity with our friends in China as well."

Free trade deal sealed after eight years

The two leaders also emerged from their meeting to announce the conclusion of a free trade deal, eight years in the making.

Mr Morrison gifted the motorcycle-mad President a kangaroo-leather bike jacket from Australia and the pair had afternoon tea in the botanical gardens to get to know each other in a more casual setting.

With Mr Widodo facing an election next year, there is a sense of urgency in getting the trade deal passed by Indonesia's Parliament.

He is already facing strong nationalistic forces in his Cabinet, who would rather go without than import foreign agricultural products, and his opponent Prabawo Subianto is running on a protectionist platform.

The question remains how strongly Mr Widodo pushes to see these deals with Australia realised.